By Bianca Mahere, Associate.

The first part of this article explored Income Tax in Zimbabwe. In this part we look at Capital Gains Tax (CGT).

Capital Gains Tax is tax charged on the profit earned from disposing or selling certain types of assets. It can also be defined as tax on the growth in value of investments incurred when individuals or corporations sell those investments. The tax is only paid on realized gains after the asset is sold or disposed of. The main governing statute for CGT in Zimbabwe is the Capital Gains Tax Act [Chapter 23:01].

The tax regulatory body, ZIMRA, provides that CGT is payable on the disposal of certain specified assets. The specified assets are classified into two categories, immovable property and marketable security. Immovable property includes land and buildings, whilst marketable security includes shares, debentures, stock, unit trusts and bonds.

The rate of CGT is determined by the date in which the asset is acquired. If the specified asset been disposed of was acquired after the 1^st of February 2009, CGT is chargeable at the rate of 20% of the capital gain. On the other hand, if the specified asset was acquired before the 1^st of February 2009, CGT is chargeable at the rate of 5% of the gross capital amount realized from the sale.

Who then is liable to pay the CGT? Since CGT is calculated as the total sale price minus the original cost of an asset, it makes sense to answer the question above to say the seller is liable to pay CGT.  In some cases, depositaries are also liable to pay CGT. A depositary may be a conveyancer, estate agent, stockbroker amongst others. These are required to withhold capital gains withholding tax where they hold any monies in respect of the disposals.

There are certain scenarios where there is exemption of payments of CGT. These are provided under section 10 of the Act and include;

1. Transfers of any specified assets between spouses,
2. Transfer of principal private residence between former spouses in pursuit of a divorce order,
3. Transfer/ disposal of a specified asset by a deceased estate,
4. Transfer/disposal of a principal private residence by an individual who is of or above the age of 55 as at date of sale/transfer, etc.

We will continue to discuss the other forms of tax in the following parts of the article.

Should you require any further information on the above please do not hesitate to contact us.

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